Airline Seats Issue might not be the first thing that comes to mind when you consider scary things we have to face now and then. But the prospects of flying without twisting in torture are becoming rare for most of us. And the fact is we are paying more for those torturous airline seats issue these days — a good 27% higher than before the Pandemic.
And the CEO’s could not be happier, as voiced in recent investor relations calls.
“I am extremely proud of the United team’s performance during the first quarter of 2023. Our industry-leading operational performance contributed to an all-time high operating cash flow in the first quarter and keeps us on track to achieve our cost targets for the full year,” said United Airlines CEO Scott Kirby.
Airline Seats Issue
Echoed Delta Air Line’s CEO Ed Bastian: “With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2 billion.”
So why are airline seats issue costing passengers that much more than they did in 2019 and at rates far outpacing the current inflation numbers, and often for spaces less than what we were seeing four years ago?
In December, American Express Global Business Travel (Amex GBT) produced its Air Monitor 2023, predicting a 25 percent jump in prices on key corporate travel routes this year – even as global airline capacity returns to 92% of 2019 levels. The report was quick to site rising jet fuel costs, airline (and airport) labor shortages, supply chain challenges at manufacturing sites and even pilot shortages so severe that some U.S. carriers are setting up their own pilot-training schools. All these factors are weighing in as demand for air travel rises at a breakneck pace — putting carriers in a strong position to raise fares and cut inventory, especially in the economy seat tiers.
These trends have resulted in some scary numbers put out by the Consumer Price Index reports: On an annual basis, airfare inflation has been up a whopping 42.9% — the highest on record — and more than five times higher than the overall inflation rate of 8.2%.
Inflation: Airline Seats Issue
Inflation isn’t stopping many Americans from taking off, braving the chaos and taking the uncomfortable distortions to endure their trips: According to Bankrate, nearly two in three (63 percent) Americans are planning a summer vacation this year — 2 percentage points higher than in 2022. And those vacations will come at a high price. The average American can expect to spend $1,585 on a one-week holiday this year, according to BudgetYourTrip.com. That’s slightly higher than the Christmas holidays last year, when a one-week vacation in the U.S. cost the average person $1,578.
Inflation for all items increased 5% between March 2022 and March 2023, according to Bureau of Labor Statistics (BLS). Though inflation is still high, it’s seeing the smallest year-over-year increase since May 2021. It also shows a significant decline since the June 2022 peak, when inflation surged to 9.1 percent.
Meanwhile, airlines are flying some 10% more passengers year over year, easily up 1% from the same period in 2019, which is considered to be an all-time peak, according to John Heimlich, CEO of Airlines for America. And that is occurring even though the airlines have 10% fewer flights scheduled than they did in 2019.
Thus, there are now fewer flights, but more people flying. – also attributed to U.S. legacy carriers operating larger planes now that are flying full. It’s proved to be a more profitable way to run an airline.
What To Do
Some customers are scratching heads as they recall some $50 billion in federal pandemic relief distributed to U.S. airlines to keep employees on the payroll and ready to spring into action when the travel market recovered. But airlines, instead, managed stock buy-backs while giving veteran pilots, senior attendants, mechanics and other workers incentives to leave or take early retirement.
The results played out in short-staffing and incompetent handling of rising demand as seen in the airline chaos of last summer and this past Christmas vacation week. While the ensuing surge in operating costs are being passed on to passengers, they are also the same taxpayers who recall giving the airlines significant sums to help keep them afloat in 2020 and 2021.
Bottom line: People need and want to travel and are, so far, willing to pay the higher prices despite the chaos, patchy service, flight delays, full planes and narrowing airline seat choices. And that first class upgrade? Forget the lounge, especially on some airlines such as American. Costs cuts are coming up in some surprising places, not just legroom and pitch – and no matter what the class or fare.
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